CFPB Compliance Bulletin and Policy Guidance
The CFPB revised its 2012 bulletin on oversight of third party service providers to make clear that supervised banks and non-banks may adopt a risk-based approach which is not “one size fits all.” The Bulletin provides guidance on steps institutions should take when retaining third party service providers and sounds the alarm that it will begin reviews of third party vendors.
The CFPB recommends that when engaging third party service providers, institutions should do at least the following to prevent legal violations and consumer harm:
1) Conduct thorough due diligence to ensure service provider understands and can comply with federal law;
2) Request and review third parties’ policies, procedures, internal controls and training materials and oversight of employees and agents with consumer contact or compliance responsibilities;
3) Ensure contract includes compliance expectations and consequences for violating compliance-related responsibilities, including engaging in unfair, deceptive, or abusive acts or practices;
4) Establish internal controls and on-going monitoring of legal compliance; and
5) Take prompt remedial action in response to problems, including termination of relationship.
The CFPB reiterates that while an institution may enter into relationships with third parties, the institution may not absolve itself of its compliance duties. Even though the policy is “non-binding,” we recommend that those subject to CFPB supervision modify their practices to comply with the Bulletin. Please let us know how we can help.
FHFA Announces GSE Conforming Loan Limits for 2017
The Federal Housing Finance Agency (“FHFA”) announced $424,100.00 as the 2017 maximum conforming loan limit for first mortgages secured by one-unit properties acquired by Fannie Mae and Freddie Mac (with the exception of several higher cost areas where higher loan limits will be in effect.) This is the first increase since 2006. The loan limits will increase in high-cost counties.
Some states incorporate FHFA’s conforming loan limits into their “high-cost home loan” and other laws. For example, some states provide that only loans that do not exceed FHFA’s conforming loan limits may be considered high-cost.